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8-K - FORM 8-K - ENTEGRIS INCd8k.htm

 

Exhibit 99.1

Entegris Reports Strong Third Quarter Results

Quarterly Sales of $178 million Marks Sixth Consecutive Quarter of Growth;

Non-GAAP EPS of $0.18; Cash from Operations Exceeds $45 Million;

Adjusted Operating Margin Reaches 18 Percent

BILLERICA, Mass., October 26, 2010 – Entegris, Inc. (Nasdaq: ENTG) today reported its financial results for the Company’s third quarter ended October 2, 2010.

The Company recorded third-quarter sales of $178.2 million, an increase of 61 percent over the prior year, and 6 percent sequentially. Net income was $22.4 million, or $0.17 per diluted share. These results included amortization of intangible assets of $2.8 million.

Non-GAAP earnings per share of $0.18 in the third quarter of 2010 compared to a loss per share of $0.02 in the third quarter a year ago and earnings per diluted share of $0.16 in the second quarter of 2010. A reconciliation table of GAAP to non-GAAP earnings (loss) per share is contained in this press release.

For the first nine months of fiscal 2010, sales were $506.3 million, up 101 percent from the first nine months of 2009. Non-GAAP earnings per diluted share for the first nine months of 2010 were $0.48 versus a loss per share of $0.43 for the same period a year ago.

Gideon Argov, president and chief executive officer, said: “Our third-quarter results marked another quarter of growth and strong operating performance, as we continue to execute our growth strategies and build shareholder value. Sales to our core semiconductor market were strong, as our liquid filtration and gas filtration businesses achieved record-level quarters. Across our portfolio of technologies, we are capitalizing on an increasing number of opportunities with our advanced filtration and microenvironment solutions to help fab customers implement advanced sub-32 nanometer processes.

“Our adjusted operating margin was 18.0 percent, consistent with our target operating model. This translated into another quarter of strong cash flow, resulting in $45 million in cash from operations and $39 million of adjusted EBITDA in the third quarter. Our net cash position is now approaching $100 million, well ahead of expectations. Thus far in the fourth quarter, demand from our customers is stable, despite the uncertain outlook for global economic recovery. Regardless of how this current industry cycle unfolds, we believe we have the opportunity to outpace our markets,” Argov said.

For the fiscal fourth quarter ending December 31, 2010, the Company expects sales to range from approximately $173 million to $183 million. Based on the Company’s target model, non-GAAP net earnings per diluted share are expected to range from $0.17 to $0.19.

Third-Quarter Results Conference Call Details

Entegris will hold a conference call to discuss its results for the third quarter on Tuesday, October 26, 2010, at 10:00 a.m. Eastern Time. Participants should dial 1-888-211-7451 (domestic callers) or 1-913-312-9323 (for callers outside of the U.S.), referencing confirmation code #9800564. A live and on-demand webcast of the call can also be accessed from the investor relations section of Entegris’ website at www.entegris.com.


 

ABOUT ENTEGRIS

Entegris is a leading provider of a wide range of products for purifying, protecting and transporting critical materials used in processing and manufacturing in the semiconductor and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.

NON-GAAP INFORMATION

The Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA and Adjusted Operating Income together with related measures thereof, and non-GAAP EPS, are considered “Non-GAAP financial measures” under the rules and regulations of the SEC. These financial measures are provided as a complement to financial measures provided in accordance with GAAP. We provide non-GAAP financial measures in order to better assess and reflect operating performance. Management believes the non-GAAP measures help indicate our baseline performance before certain gains, losses or other charges that may not be indicative of our business or future outlook. We believe these non-GAAP measures will aid investors’ overall understanding of our results by providing a higher degree of transparency for certain expenses and providing a level of disclosure that will help investors understand how we plan and measure our business. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP. The calculations of Adjusted EBITDA margin, Adjusted Operating Income, and non-GAAP EPS are included elsewhere in this release.

Forward-Looking Statements

Certain information contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current management expectations only as of the date of this press release, and involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements that include such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “will,” “should” or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, Entegris’ future operating results, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris’ periodic public filings with the Securities and Exchange Commission, including discussions appearing under the headings “Risks Relating to our Business and Industry,” “Risks Related to our Borrowings”, “Manufacturing Risks,” “International Risks,” and “Risks Related to Owning Our Securities” in Item 1A of our Annual Report on Form 10–K for the fiscal year ended December 31, 2009, as well as other matters and important factors disclosed previously and from time to time in the filings of Entegris with the U.S. Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.


 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

     Three months ended  
     October 2,
2010
    July 3,
2010
    September 26,
2009
 

Net sales

   $ 178,230      $ 167,575      $ 110,706   

Cost of sales

     98,374        90,448        65,878   

Charge for fair value mark up of acquired inventory

     —          —          51   
                        

Gross profit

     79,856        77,127        44,777   

Selling, general and administrative expenses

     36,478        36,592        29,175   

Engineering, research and development expenses

     11,381        10,736        8,575   

Amortization of intangible assets

     2,823        3,364        4,723   

Restructuring charges

     —          —          2,368   
                        

Operating income (loss)

     29,174        26,435        (64

Interest expense, net

     342        1,662        2,681   

Other expense, net

     1,283        711        4,114   
                        

Income (loss) before income taxes

     27,549        24,062        (6,859

Income tax expense

     5,000        5,393        623   

Equity in net (earnings) loss of affiliates

     (217     (77     132   
                        

Net income (loss)

     22,766        18,746        (7,614

Net income (loss) attributable to noncontrolling interest

     348        361        (6
                        

Net income (loss) attributable to Entegris, Inc.

   $ 22,418      $ 18,385      $ (7,608
                        

Amounts attributable to Entegris, Inc.:

      

Basic net income (loss) per common share:

   $ 0.17      $ 0.14      $ (0.07

Diluted net income (loss) per common share:

   $ 0.17      $ 0.14      $ (0.07

Weighted average shares outstanding:

      

Basic

     131,903        131,568        115,023   

Diluted

     133,071        132,870        115,023   


 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

     Nine months ended  
     October 2,
2010
    September 26,
2009
 

Net sales

   $ 506,316      $ 252,320   

Cost of sales

     276,182        174,679   

Charge for fair value mark up of acquired inventory

     —          4,116   
                

Gross profit

     230,134        73,525   

Selling, general and administrative expenses

     108,852        84,581   

Engineering, research and development expenses

     32,937        25,322   

Amortization of intangible assets

     10,459        14,635   

Restructuring charges

     —          12,454   
                

Operating income (loss)

     77,886        (63,467

Interest expense, net

     3,210        7,105   

Other expense, net

     1,701        429   
                

Income (loss) before income taxes

     72,975        (71,001

Income tax expense (benefit)

     15,202        (4,226

Equity in net (earnings) loss of affiliates

     (485     1,076   
                

Net income (loss)

     58,258        (67,851

Net income (loss) attributable to noncontrolling interest

     905        (6
                

Net income (loss) attributable to Entegris, Inc.

   $ 57,353      $ (67,845
                

Amounts attributable to Entegris, Inc.:

    

Basic net income (loss) per common share:

   $ 0.44      $ (0.60

Diluted net income (loss) per common share:

   $ 0.43      $ (0.60

Weighted average shares outstanding:

    

Basic

     131,475        113,355   

Diluted

     132,908        113,355   


 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     October 2, 2010      December 31, 2009  

ASSETS

     

Cash and cash equivalents

   $ 98,814       $ 68,700   

Accounts receivable, net

     123,789         91,122   

Inventories

     97,625         83,233   

Deferred tax assets, deferred tax charges and refundable income taxes

     11,917         11,085   

Other current assets and assets held for sale

     11,982         13,318   
                 

Total current assets

     344,127         267,458   

Property, plant and equipment, net

     131,738         135,431   

Intangible assets

     67,863         78,470   

Deferred tax assets – non-current

     8,064         9,670   

Other assets

     13,500         13,643   
                 

Total assets

   $ 565,292       $ 504,672   
                 

LIABILITIES AND EQUITY

     

Current maturities of long-term debt

   $ 6,077       $ 11,257   

Short-term borrowings

     —           8,039   

Accounts payable

     35,914         23,553   

Accrued liabilities

     55,813         29,832   

Income tax payable and deferred tax liabilities

     13,323         1,229   
                 

Total current liabilities

     111,127         73,910   

Long-term debt, less current maturities

     —           52,492   

Other liabilities

     26,245         28,613   

Equity

     427,920         349,657   
                 

Total liabilities and equity

   $ 565,292       $ 504,672   
                 


 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Three months ended     Nine months ended  
     October 2,
2010
    September 26,
2009
    October 2,
2010
    September 26,
2009
 

Operating activities:

        

Net income (loss)

   $ 22,766      $ (7,614   $ 58,258      $ (67,851

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

        

Depreciation

     6,755        7,455        20,645        23,628   

Amortization

     2,823        4,723        10,459        14,635   

Stock-based compensation expense

     1,752        2,120        5,434        6,299   

Charge for fair value mark-up of acquired inventory

     —          51        —          4,116   

Other

     1,305        2,097        1,859        4,884   

Changes in operating assets and liabilities

        

Trade accounts and notes receivable

     (1,786     (17,272     (27,760     (7,486

Inventories

     (4,635     (735     (11,229     10,715   

Accounts payable and accrued liabilities

     14,707        6,212        32,351        1,783   

Income taxes payable and refundable income taxes

     1,982        (1,803     8,430        2,037   

Other

     (567     3,973        2,467        115   
                                

Net cash provided by (used in) operating activities

     45,102        (793     100,914        (7,125
                                

Investing activities:

        

Acquisition of property and equipment

     (4,502     (1,122     (12,159     (11,521

Other

     480        2,807        4,492        3,043   
                                

Net cash (used in) provided by investing activities

     (4,022     1,685        (7,667     (8,478
                                

Financing activities:

        

Payments on short-term borrowings and long-term debt

     (22,811     (221,165     (252,954     (528,116

Proceeds from short-term and long-term borrowings

     2,291        156,212        186,649        452,722   

Proceeds from stock offering, net of offering costs

     —          56,687        —          56,687   

Issuance of common stock

     6        491        1,663        1,061   

Payments for debt issuance costs

     (1     (138     (149     (3,638

Other

     44        —          64        —     
                                

Net cash used in financing activities

     (20,471     (7,913     (64,727     (21,284
                                

Effect of exchange rate changes on cash

     2,892        1,331        1,594        230   
                                

Increase (decrease) in cash and cash equivalents

     23,501        (5,690     30,114        (36,657

Cash and cash equivalents at beginning of period

     75,313        84,066        68,700        115,033   
                                

Cash and cash equivalents at end of period

   $ 98,814      $ 78,376      $ 98,814      $ 78,376   
                                


 

Entegris, Inc. and Subsidiaries

Segment Information

(In thousands)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  

Net sales

   October 2,
2010
    July 3, 2010     September 26,
2009
    October 2,
2010
    September 26,
2009
 

Contamination Control Solutions

   $ 113,350      $ 103,660      $ 65,649      $ 317,752      $ 147,477   

Microenvironments

     47,383        47,388        32,445        136,698        73,303   

Specialty Materials

     17,497        16,527        12,612        51,866        31,540   
                                        

Total net sales

   $ 178,230      $ 167,575      $ 110,706      $ 506,316      $ 252,320   
                                        
     Three Months Ended     Nine Months Ended  

Segment profit (loss)

   October 2,
2010
    July 3, 2010     September 26,
2009
    October 2,
2010
    September 26,
2009
 

Contamination Control Solutions

   $ 31,434      $ 28,614      $ 11,832      $ 88,282      $ 5,991   

Microenvironments

     11,664        12,165        5,054        32,808        (5,414

Specialty Materials

     2,349        2,061        1,369        6,752        939   
                                        

Total segment profit

     45,447        42,840        18,255        127,842        1,516   

Amortization of intangibles, charge for fair value mark-up of acquired inventory and restructuring charges

     (2,823     (3,364     (7,142     (10,459     (31,205

Unallocated expenses

     (13,450     (13,041     (11,177     (39,497     (33,778
                                        

Total operating income (loss)

   $ 29,174      $ 26,435      $ (64   $ 77,886      $ (63,467
                                        


 

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP to Adjusted Operating Income (Loss) and Adjusted EBITDA

(In thousands)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     October 2,
2010
    July 3, 2010     September 26,
2009
    October 2,
2010
    September 26,
2009
 

Net sales

   $ 178,230      $ 167,575      $ 110,706      $ 506,316      $ 252,320   
                                        

GAAP – Operating income (loss)

   $ 29,174      $ 26,435      $ (64   $ 77,886      $ (63,467

Restructuring charges

     —          —          2,368        —          12,454   

Charge for fair value mark-up of acquired inventory

     —          —          51        —          4,116   

Amortization of intangible assets

     2,823        3,364        4,723        10,459        14,635   
                                        

Adjusted operating income (loss)

     31,997        29,799        7,078        88,345        (32,262

Depreciation

     6,755        7,166        7,455        20,645        23,628   
                                        

Adjusted EBITDA

   $ 38,752      $ 36,965      $ 14,533      $ 108,990      $ (8,634
                                        

Adjusted operating margin

     18.0     17.8     6.4     17.4     (12.8 )% 

Adjusted EBITDA – as a % of net sales

     21.7     22.1     13.1     21.5     (3.4 )% 


 

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Earnings (Loss) per Share

(In thousands)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     October 2,
2010
    July 3, 2010     September 26,
2009
    October 2,
2010
    September 26,
2009
 

GAAP net income (loss) attributable to Entegris, Inc.

   $ 22,418      $ 18,385      $ (7,608   $ 57,353      $ (67,845

Adjustments to net income (loss) attributable to Entegris, Inc.:

          

Amortization of intangible assets

     2,823        3,364        4,723        10,459        14,635   

Charge for fair value mark-up of acquired inventory

     —          —          51        —          4,116   

Accelerated write-off of debt issuance costs

     —          890        —          890        343   

Gain on sale of equity investment

     (500     (392     —          (892     —     

Tax effect of adjustments to net income (loss) attributable to Entegris, Inc.

     (854     (1,428     —          (3,849     —     
                                        

Non-GAAP net income (loss) attributable to Entegris, Inc.

   $ 23,887      $ 20,819      $ (2,834   $ 63,961      $ (48,751
                                        

Diluted earnings (loss) per common share attributable to Entegris, Inc.:

   $ 0.17      $ 0.14      $ (0.07   $ 0.43      $ (0.60

Effect of adjustments to net income (loss) attributable to Entegris, Inc.

     0.01        0.02        (0.04   $ 0.05        0.17   

Diluted non-GAAP earnings (loss) per common share attributable to Entegris, Inc.:

   $ 0.18      $ 0.16      $ (0.02   $ 0.48      $ (0.43
                                        

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